4 Common Financial Mistakes Young Professionals Make
For most young people, the compensation package that they receive from an employer after college is the largest that they have gotten in their entire lives. Therefore, it may be tempting to splurge on a nice apartment, new car or other things that they couldn’t afford before. However, it may be better to save that money or use it on needs instead of wants.
Young People Don’t Make Retirement a Priority
The sooner that you start saving for retirement, the less that you need to put away each month to reach your savings goal.
urthermore, you will have more money available for retirement thanks to the concept of compound interest.
This means that your money will grow exponentially instead of at the same rate each month, year or decade.
New Professionals Spend too Much Money on Food
While there is nothing wrong with trying a new restaurant for dinner every so often, it can be expensive to eat out on a regular basis.
Even if you have food delivered, you have to pay a delivery fee and tip your driver.
In addition to saving money on overpriced items, it is generally healthier to make meals yourself.
It’s Generally a Good Idea to Skip the Status Symbols
Younger people tend to care about the brands that they affiliate with. This is often true regardless of the price tag that they come with.
For instance, they may buy the latest iPhone even when their current device works just fine.
They may also choose to rent in trendy areas even if doing so exceeds their intended housing budget.
Buying a New Isn’t Always the Best Decision
If you are in the market for a pre owned vehicle, it is generally a good idea to buy used instead of new.
This is because they typically cost less and depreciate more slowly. This means that you get to make a lower monthly car payment on a vehicle that will be worth more when it comes to sell or trade it.
It is important to note that a used car is simply one that has had a previous owner. In some cases, it can be from the latest model year or from the previous model year.
When you get your first job, it is time to start thinking about saving for the future.
This means putting money in the bank or in a dedicated retirement account like an IRA or 401(k). Once you gain financial stability, you can then splurge on life’s luxuries.
Category: Financial Planning
